Hasbro 2011 Annual Report Download - page 31

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Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
Hasbro owns its corporate headquarters in Pawtucket, Rhode Island consisting of approximately 343,000
square feet, which is used by the U.S. and Canada, Global Operations and Entertainment and Licensing segments
as well as for corporate functions. The Company also owns an adjacent building consisting of approximately
23,000 square feet that is used in the corporate function. In addition, the Company leases a building in East
Providence, Rhode Island consisting of approximately 120,000 square feet used by the Global Operations and
Entertainment and Licensing segments as well as corporate functions and temporary space in Providence, Rhode
Island consisting of approximately 25,000 square feet, that is used by the U.S. and Canada, Global Operations
and Entertainment and Licensing segments. In addition to the above facilities, the Company also leases office
space consisting of approximately 95,400 square feet in Renton, Washington as well as warehouse space
aggregating approximately 2,388,000 square feet in Georgia, California, Texas and Quebec that are also used by
the U.S. and Canada segment. The Company also leases, in aggregate, approximately 42,000 square feet in
Dedham, Massachusetts and Burbank, California that is used by the Entertainment and Licensing segment.
The Company owns manufacturing plants in East Longmeadow, Massachusetts and Waterford, Ireland. The
East Longmeadow plant consists of approximately 1,148,000 square feet and is used by the Global Operations
segment. The Waterford plant consists of approximately 244,000 square feet and is used by our Global
Operations segment. The Global Operations segment also leases an aggregate of 90,000 square feet of office and
warehouse space in Hong Kong used by this segment as well as approximately 76,000 square feet of office space
leased in China.
In the International segment, the Company leases or owns property in over 35 countries. The primary
locations in the International segment are in the United Kingdom, Mexico, Germany, France, Spain, Australia
and Brazil, all of which are comprised of both office and warehouse space. The Company also leases offices in
Switzerland and the Netherlands which are primarily used in corporate functions.
The above properties consist, in general, of brick, cinder block or concrete block buildings which the
Company believes are in good condition and well maintained.
The Company believes that its facilities are adequate for its needs. The Company believes that, should it not
be able to renew any of the leases related to its leased facilities, it could secure similar substitute properties
without a material adverse impact on its operations.
Item 3. Legal Proceedings.
The Company has outstanding tax assessments from the Mexican tax authorities relating to the years 2000
through 2005. These tax assessments, which total approximately $177 million (at year-end 2011 exchange rates)
in aggregate (including interest, penalties, and inflation updates), are based on transfer pricing issues between the
Company’s subsidiaries with respect to the Company’s operations in Mexico. The Company has filed suit in the
Federal Tribunal of Fiscal and Administrative Justice in Mexico challenging the 2000 through 2004 assessments.
The Company filed the suit related to the 2000 and 2001 assessments in May 2009; the 2002 assessment in June
2008; the 2003 assessment in March 2009; and the 2004 assessment in July 2011. The Company is challenging
the 2005 assessment through administrative appeals. The Company expects to be successful in sustaining its
positions for all of these years. However, in order to challenge the outstanding tax assessments related to 2000
through 2004 in court, as is usual and customary in Mexico in these matters, the Company was required to either
make a deposit or post a bond in the full amount of the assessments. The Company elected to post bonds and
accordingly, as of December 25, 2011, bonds totaling approximately $151 million (at year-end 2011 exchange
rates) have been posted related to the 2000, 2001, 2002, 2003 and 2004 assessments. These bonds guarantee the
full amounts of the related outstanding tax assessments in the event the Company is not successful in its
challenge to them. The Company does not currently expect that it will be required to make a deposit or post a
bond related to the 2005 assessment as the Company is challenging it through administrative appeals.
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